Musings From A Big-Think Analyst
By Andrew Serwer

(FORTUNE Magazine) – Kiril Sokoloff has always danced to the beat of a different drum. Only problem was, for years he couldn't hear the music. You see, Sokoloff is a big-think, independent investment analyst who sells his research to the likes of Julian Robertson, Steve Wynn, and Edgar Bronfman Sr. And remarkably, for much of his career Sokoloff has been deaf because of a genetic condition that surfaced when he was a teenager.

Sokoloff, now 51, started at Citicorp but went out on his own in 1977. "I wanted to study the strategies of the world's greatest investors," he says from his Boca Raton office. (He also has digs in Sun Valley.) "I spent a lot of time looking at 13D filings, so I called my company 13D Research." Sokoloff correctly predicted there would be a wave of takeovers in the 1980s. Then he delved into distressed securities. Then the boom and bust of emerging markets. And today? Not surprisingly, Sokoloff is focusing on digital technology and the Internet. But unlike Wall Street's madding crowd, he isn't slicing and dicing Amazon's latest numbers.

"We're looking at the Internet in terms of creative destruction," he says. "Who are the losers? What's going to happen to sales tax, and how will that impact state tax revenues and budgets? What will the Internet do to commercial property values? Will it destroy corporate profits?"

Okay, Kiril, but what about the winners? "We like a broadband technology called local multipoint distribution devices. It's the lowest-cost, highest-bandwidth way to go into office buildings. We like Nextlink, which is 50% controlled by Craig McCaw. Also Teligent--Alex Mandel's company--and Winstar."

Satellite telecommunications is another favorite venue. "There is no way fiber and copper cable can cover the entire world" he says. "Cellular is still a huge growth business, and satellites are the most cost-effective way for it to grow. We like Global Star, which has Soros and Sid Bass as investors." Loral and Hughes Electronics are two more.

What else? Sokoloff sees opportunity in drugs, particularly in outfits that help giant pharmaceuticals companies bring drugs to market more efficiently. "The top ten drug companies introduce about five drugs a year at $350 million each. Only one in ten ever recoups its costs." Two names he likes--both of which cut costs for big drug companies by managing clinical trials--are Quintiles Transnational and Covance.

One reason Sokoloff is so keen on medical research is his deafness and--I'm happy to say--his triumph over that handicap. Three years ago he was fitted with breakthrough implants that restored his hearing 50% to 70%. "After my operation, I was having Thanksgiving dinner with Jack Hemingway [the author's eldest son] in Sun Valley," says Sokoloff. "Jack kind of mumbles and has a mustache, so I had never been able to understand him, but now I could. It was an emotional moment for us both."


The radio business has been turned upside down since deregulation three years ago. Actually, "rolled up" is a better phrase, as players like Sam Zell, Hicks Muse, and Clear Channel (awesome stock!) went on mega shopping sprees. But one you probably haven't heard of is Cumulus (as in cloud) Media out of Milwaukee. The company is run by Richard Weening, a Suds City entrepreneur who has quietly bought over 240 radio stations, making CMLS the third-largest radio company in the country in terms of stations owned. Unlike the big boys, Cumulus goes for stations in midsized markets. Hey, it owns 'em in Oshkosh and Dubuque!

The company went public last year at $14, fell to under $5 in the fall, but is now up to $18. Like other radio cos., it is measured by cash flow. Pru and Morgan Stanley recently bumped their price targets for the stock up to the mid-to-high 20s. Beam me up!